Cybersecurity: 'The old architecture… no longer works in the world of cloud,' Zscaler CEO says

Zscaler CEO and Founder Jay Chaudhry discusses the cybersecurity industry's ability to adapt as data security systems transition to cloud-based models and COVID continues to impact the workplace.

Video Transcript

BRIAN CHEUNG: Earlier this week, cloud security firm Zscaler announced earnings, a reported revenue of $230.5 million for the bottom line, adjusted earnings per share of $0.14. So let's bring in Jay Chaudhry, Zscaler's CEO and founder of the company. Jay thanks so much for hopping on the show today. Obviously, when it comes to cloud security, there's a need for it and we can see that just based off of your stock, which has been up 60% year-to-date. And I guess my first question is when you interact with the many CIOs, the CISOs that you engage with that are your clients in many cases, what are they looking for here as we, kind of, think about the cyber ransomware risk that could be coming down the pike.

JAY CHAUDHRY: CIOs and CISOs, Brian, have been spending tons and tons of money on security, but they're finding that the results aren't that good. I think they're finally realizing that the old architecture based on firewalls and VPNs no longer works in the world of cloud. So they're all looking for embracing zero trust architecture, which we pioneered, which we built. And we are securing 35% of Fortune 500 companies. And there's a lot of interest in it. That's what's driving our growth. I'm very proud of 71% year-over-year billings growth and 62% revenue growth.

BRIAN SOZZI: Jay, you mentioned on the earnings call that you're seeing the security market rapidly changing. What are some of those changes?

JAY CHAUDHRY: The biggest change is the old architecture where everything is in my data center, my employees are sitting in the office, so I'm protecting my trusted network is no longer good. If your applications are in the cloud, your users are working from wherever, the new architecture is needed. You know, every 20 to 30 years the architecture fundamentally changes.

This is no longer incremental changes that we keep on improving-- the old architecture we have-- this is a new one. It's like moving away from traditional cars to electric vehicles, like Tesla. I think there's a bunch of inertia out there. We are out there evangelizing, educating the market. And COVID has shown and proven that people can actually work from where they want to and that's what's driving now a move towards zero trust architecture, which Zscaler pioneered when I started this company in 2008.

We're seeing great momentum. And we are very pleased and gratified to help our customers during these crazy times when the bad guys are trying to take advantage of it. And that's why you see all these ransomware attacks coming from left and right.

BRIAN SOZZI: And, Jay, as you know, it is jobs day in America. And we talked at length last time with you about what you're doing on the hiring front. Clearly, you've done a lot of correct hiring, just given your-- where your financials have come and where they may be going next year. As a founder, what do you ask potential hires and what do you think other companies should be asking potential hires in this type of really crazy environment?

JAY CHAUDHRY: It is very gratifying. I came to this country as an immigrant. As I graduated from college, I was ready to take any job. Today, it's so satisfying to be able to create 4,000-plus jobs at Zscaler.

So we look for people who have the passion and desire in cybersecurity. Passion matters. So we are hiring from various areas and people who have desired to learn because security keeps on changing all the time. And that's why we hire a number of people from colleges who actually come up with new skills, are willing to learn and make a difference.

And also with COVID, the world has opened up. We are able to hire in any part of the world and in any part of the country. So we have open up hiring in East Coast, in Canada, in Europe, and everywhere else. It is extremely important for us to have the right fire, and that's what's helping us deliver great results.

JULIE HYMAN: And, Jay, it's Julie here. The people that you're hiring, do they have any interest in coming into an office or are they perfectly happy to remain working at home? And I wonder also if you're starting to see any talk amongst your employees about the Omicron variant and whether that's affecting whether they want to come in.

JAY CHAUDHRY: The view about coming to the office and not coming to the office is mixed. People do like hybrid environment. For a company like Zscaler, you don't really need to come to the office to do your core job. But I think people like to come to office to collaborate, stand behind-- in front of the whiteboard, come up with new ideas just like you're seeing in this video. That's a typical screenshot from Zscaler office. So we see a hybrid world where people have options and choices, but there'll be some collaboration sessions from time to time.

There is concern about the new variant. I think we need to make sure the health and safety of our employees is most important. So for travel, for example, we are pretty flexible. We're not-- our job doesn't require to be in front the customer. So we are actually happy that our technology is giving other organizations the same choice-- some of the biggest companies out there, whether it's Siemens, or Target, or Fannie Mae, or Unilever. They actually have been Zscaler-- have been using Zscaler technology, so their employees can work from anywhere safely.

BRIAN CHEUNG: Jay Chaudhry, Zscaler CEO, thanks for stopping by Yahoo Finance this morning.